Globalization of R&D and China: An Introduction

Abstract

In this introduction, we discuss the recent changes in multinational corporations' (MNC) research and development (R&D) strategies and China's rising roles in this new development. Significant changes include: 1) More and more corporations have started overseas R&D operations; 2) the missions of many overseas R&D facilities have shifted from the traditional supplementing and supporting roles to become critical and strategic components of MNCs' global R&D networks; and 3) MNC overseas R&D operations have expanded their geographic reach to carefully selected developing countries. China has benefited from such changes and has become one major attraction of such R&D facilities due to its rich endowment of low-cost and well trained scientists and engineers as well as its fast growing domestic market and burgeoning foreign investment in manufacturing. The explosion of foreign R&D investment has also been accompanied by the rapid growth of China's domestic investment in R&D. The growth in both domestic and foreign investment in R&D implies that China will improve its position in global economic and technological competition. However, it is unclear to the rest of the world about the implications of China's rising R&D and whether or not China can capture the value from the presence of foreign R&D centres. We conclude that issues related to China's science and technology development in general and foreign R&D in China in particular warrant more research in the future.

Keywords: China, globalization, outsourcing, offshoring, R&D

JEL Classification: O18, O31, O34, O38, O53